‘Change is inevitable’, as they say, and this most definitely applies to financial services, personal investment and saving.

As we go through life, our financial situation can be affected by the decisions we take, as well as external factors over which we have little or no control – births, deaths, marriages and stock market events, all play into the mix.

It is important that not only do we regularly review our current financial situation, but we also plan for our future wealth. It is particularly paramount when we are estate planning to have an eye on the medium to long term too.

Over our lifetime, as we grow and use our wealth, the value of our estate will change.

For the majority of people, the main assets we gain in a lifetime tend to be property and pensions. While the property market may have experienced a slowdown recently, over the long term, property prices have tended to rise, meaning the value of our homes as assets keep rising.

Through our working life we aim to increase the value of our pension pot, but in retirement, when we start to draw income from our pensions, the value of the pension pot will diminish.

In terms of our investments and savings, we should consider where, if we act wisely and with proper advice, our wealth might be in 10, 20 or 30 years time?

Bearing this in mind the importance of estate planning becomes clear.

As our property and investment assets rise, they could see the value of our estate pushed into the inheritance tax bracket. HMRC’s ever increasing inheritance tax receipts would suggest this is happening.

As we draw income from our pensions, we need to know that we will not run out of money later in life. We also need to factor in potential life events, such as the need for later life care.

Some of us inherit wealth; how might that change our financial and tax situation?

Future events cannot be guaranteed of course, so it is important that we review our plans on what we know now. Making estate planning part of our overall financial plan
means we can look ahead and be better prepared to manage events when they occur.

Another point to consider is ensuring our wealth goes where we want it to. Making a will and keeping it updated, should be part of our overall financial planning. We can help you better understand how your plans and decisions could affect the value of your estate over time, and to create an effective plan that suits your individual circumstances.

Calculating the value of your assets and estate

What are you worth and what does that mean for passing on wealth and inheritance tax?

By bringing your assets together to calculate the value of your estate you can plan better for the future. A good place to begin is by listing your assets, along with their
value, starting with the most valuable. Among your largest assets could be:

Property: Our homes have been rising in value for decades, potentially pushing us into the inheritance tax bracket.

Pensions: While sitting outside our estate for tax purposes, whether we use our pensions as income or as a way to pass our wealth down to future generations, will affect our estate planning.

Investments: Regular investment, even within a tax efficient wrapper, forms part of our estate for inheritance tax purposes.

Savings: Cash savings, likewise, are part of our estate – even those held by the Treasury, such as premium bonds.

Other: This could include any other assets of value, such as art and antiques.

If you would like to know more, please talk to us today by calling 0191 281 8811 and one of our experienced advisers will be in touch. 

The Financial Conduct Authority does not regulate on Trusts, Estate Planning and Tax Planning.